[Travelandtourism] American, US Airways agree on mega-merger

[Reese]

The boards of directors of American Airlines parent AMR Corp. and US Airways 
have "unanimously approved a definitive merger agreement under which the 
companies will combine to create a premier global carrier" with an equity 
value of $11 billion, the two airlines announced Thursday morning.

The new, combined airline will be called "American Airlines" with US Airways 
chairman and CEO Doug Parker heading the company as CEO. It will be based at 
Dallas/Fort Worth International Airport. AMR chairman, president and CEO Tom 
Horton will temporarily serve as chairman of the board of the new company 
through its first annual shareholders meeting.

The combined carrier is expected to generate $1 billion in annual net 
synergies by 2015. Including mainline and regional aircraft, the new 
American will have more than 1,500 aircraft in its fleet and more than 600 
new aircraft on order.

American has been operating under Chapter 11 bankruptcy protection since 
November 2011, and had originally planned to emerge from bankruptcy as a 
standalone entity. However, US Airways executives and American's unionized 
workers have been pushing for a merger for months, with speculation heating 
up over the last week that a deal was imminent.

The board of the new company will be comprised of three American 
representatives, including Horton, four US Airways representatives, 
including Parker, and five representatives from AMR's creditor's committee.

According to American and US Airways, US Airways stockholders will receive 
one share of common stock of the new American for each share of US Airways 
common stock they now hold. In aggregate, US Airways shareholders will hold 
28% of the combined airline while 72% will be held by AMR stakeholders, 
which will include American's labor unions and current AMR employees.

The merger is contingent on a US bankruptcy court approving AMR's plan of 
reorganization to emerge from Chapter 11 as part of the combined carrier. 
The US Department of Justice must also clear the deal, which is expected.

The new American will operate 6,700 daily flights to 336 destinations in 56 
countries. "The combined airline is expected to maintain all hubs currently 
served by American Airlines and US Airways," the companies said.

"Today, we are proud to launch the new American Airlines," Horton said, 
adding, "The combination of American and US Airways brings together two 
highly complementary networks with access to the best destinations around 
the globe and gives us a strong platform to provide our customers the most 
connected, comfortable travel experience available. The operational and 
financial strength of the combined airline is expected to enable continued 
investment in new products and technologies and will create exciting new 
opportunities for our people, even as we deliver strong cash flow and 
sustainable profitability."

He continued, "It is unusual in Chapter 11 cases-and unprecedented in recent 
airline restructurings-for shareholders to receive meaningful recoveries. I 
look forward to working closely with Doug Parker."

Parker said, "American Airlines is one of the world's most iconic brands. 
The combined airline will have the scale, breadth and capabilities to 
compete more effectively and profitably in the global marketplace. Our 
combined network will provide a significantly more attractive offering to 
customers."

The merger would leave the US with just three full-service international 
airlines, down from six five years ago, as the US Airways brand would join 
Continental Airlines and Northwest Airlines as existing only in the history 
books.
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